Forget About $5 Gas: $3 Gas Is Bad Enough

By Lisa Margonelli

James Schlesinger famously said that Americans have two modes when it
comes to oil: complacency and panic. This week, it seems, we're having
both at the same time.

Today the national retail average for gasoline is $3.07 per gallon, which is higher
than it's been since 2008. But instead of freaking out about that, the
media has been focusing on the possibility of $5 gasoline in 2012, a claim made by former Shell President John
Hofmeister. Hofmeister's point (he heads a non-profit called Citizens
for Affordable Energy) is that the problem is that we're "essentially
frittering at the edges of renewable energy, stifling production in
hydrocarbon energy," leading to "blackouts, brownouts, gas lines,
rationing."

When Platts printed Mr. Hofmeister's predictions the
day after Christmas, he became an instant media sensation. Even Platts
claimed to be surprised by the ruckus, since Mr. Hofmeister had
predicted the same many times before, and it would imply that the price
of crude reaches $180 a barrel, which even the boldest analysts think is
too high.

Why are we panicking about unlikely $5 gasoline? Perhaps because it's
more comfortable to think about something that probably won't happen
rather than preparing to be clobbered by $3.25-$3.75 gasoline between
now and May. By then, OPIS
analyst Tom Kloza estimates we'll be spending $38-$44 billion a month
on gasoline. That's about twice as much as we spent on gas in the
month of December 2009. I mean, that's about $20 billion more!

This
is not going to wallop all families equally. Consider the city of
Atlanta, where the average commute length is 39.4
miles each way. I've mentioned before that the Department of
Commerce estimates that a household making $50,000 a year spends more on
their cars and fuel ($7,900) than on health care or taxes, but those
numbers are low. Extrapolating out from the government estimates, I'd
guess that an average Atlanta commuter, driving
an average car (17.4 MPG) is spending an extra $35 a week on their
commute today (over the government average) and at $3.75 a gallon
they'll need an extra $55 a week. There was a time when people could put
expensive gas on their credit cards (and pay it off at high interest
later) but those "free" cards don't arrive in the mail as often now.

People
will have to search for alternative transit, which is rarely available.
If they can't find a carpool, they'll eventually have to figure out if
they can continue to afford to get to their jobs, or if they can move or
get a new car. (I'm working on a new project called the EnergyTrap to study how high gas
prices affect middle income families and the economy at large. Please
join us at the website, or on Facebook .)

Rather
than talking about $5 gas, which Mr. Hofmeister thinks can be avoided
by OKing more drilling in the US (a long-term project), we need to be
planning about what to do in late February. On a local and national
level, we need to think of new ways to get people to work--or let them
stay home. Congress should discuss giving emergency tax breaks to
companies that either encourage telecommuting or provide carpool incentives to their employees. Startup companies that help
people find trustworthy carpool buddies, or otherwise get from A to B
with less gas should be encouraged. We are now able to clearly see that
prices are rising and they they will continue to be volatile for the
next decade. While we can't remodel our spread out system immediately,
we can certainly plan for the inevitable.

The last two years have seen a tremendous hullabaloo about creating
"green jobs," we need to take the step of making every job greener by
giving workers more ways to get to work than burning expensive gasoline.